Treasury Secretary Says Tax Plan Will Eliminate Most Personal Deductions CSPAN April 26, 2017 1:36pm-2:02pm EDT
australia. >> we don't need a war with australia, thanks. [ applause ] that was absolutely fantastic but unfortunately it has to stop because it could go on and on i think in terms of the depth of things. we're going to break now for half an hour. the next session is about the problem of strangers. do we look after our own here first or are there obligations to people further away, non-citizens, people in other countri countries. there are books for sale just over there by john dean, are you prepared to sign some if people buy them? they may or may not, i'm not sure. but before we wind this up for half an hour join me in thanking a wonderful panel.
[ applause ] live to the white house for a briefing this afternoon on the president's tax reform plan. we expect to hear from treasury secretary steve mnuchin and the national economic director gary cohn at this briefing live on c-span 3. >> never thought so many people would be turning out for the intick weties act. >> good one. >> i had to use it. we're here to talk about the president's effort to provide tax relief to our corporations that will grow jobs and middle americans. two people to explain it, gary cohn is going to walk through why we're doing and what we're doing then the personal side. and secretary of the treasury
stephen mnuchin will walk through the business and corporate side of what the president is doing to bring jobs back to this country, to make our businesses more competitive and help our economy grow. at the end we'll be glad to take questions on this. you are being provided a one pager that provides the top level of the plan and both the director and secretary will go into further detail. so without further ado, director gary cohn. >> thank you, sean and good afternoon, everyone thank you for being here. this is an historic day for us and one we've been looking to for a long time and one we're excited about. we have a once in a generation opportunity to do something really big. president trump has made tax reform a priority and we have a republican congress that wants to get it done and this is
dollars are spent. they are frustrated by a tax code that is so complicated they can't even do their own taxes. that's why tax reform is such a big priority to this president. he cares about making the economy work better for all american people. here's a little history. when president kennedy cut taxes in the early 1960s, the top rate on personal income was over 90% and there was rampant tax avoidance and then 20 years later president reagan took rates down to 28% for individuals. since then rates have been creeping back up and more loopholes and special interest tax breaks have made their way back into the tax code, disadvantaging average americans. then on the business side when president reagan left office in 1988, the corporate tax rate was 34% and it hasn't changed much since. for the last 25 years other countries have been aggressively cutting their tax rates and
moving to a territorial system in order to attract business and the u.s. has done none of that. in 2017, we are still stuck with a 1988 corporate tax. that's why we are now one of the least competitive countries in the developed world when it comes to corporate tax. so tax reform is long overdue we are going to cut taxes for businesses to make them competitive and we are going to cut taxes for the american people, especially low and middle-income families. today i'm going to outline the principles we have put in place for personal tax reform then i'll hand it over to secretary mnuchin to talk about the business side. first, there are a few statistics for you on the individual side. in 1935, we had a one-page tax form consisting of 34 lines with two pages of instructions today the basic 1040 form has 79 lines
and 211 pages of instructions. instead of a single form, the irs now has 199 tax forms on the individual side of our tax code. taxpayers spend nearly 7 billion hours complying with these tax codeser year. and nearly 90% of taxpayers need some help in filing their taxes. we are going to cut taxes and simplify the tax code by taking the current seven tax braekts we have today and reducing them to only three brackets. a 10% bracket, a 25% bracket and a 35% bracket. we'll double the standard deduction so that a married couple won't pay any taxes on the first $24,000 of income they earn. so in essence, we are creating a zero tax rate, yes, a zero tax rate for the first $24,000 that
a couple earns. the larger standard deduction also leads to simplification because far fewer taxpayers will need to itemize. which means their tax form can go back to the one simple page that i talked about earlier. families will benefit from tax relief to help phlegm child and dependent care expenses. we'll repeal the alternative minimum tax. the amt creates significant complications and burdens which require taxpayers to do their taxes twice to see which is higher. that makes no sense and we should have one simple tax code. as we all know job creation and economic growth is the top priority of the administration. nothing drives economic growth like capital investment. therefore, we are going to have to return to the top capital
gains tax rate and dividend rate to 20% repealing the harmful 3.8% obamacare tax on dividends and capital gains. that tax has been a direct hit on investment income and small business owners. we're going to repeal the death tax. the threat of being hit by the death tax leaves small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die. no one wants to see the things sold. we are going to eliminate tax breaks that are mainly benefits to high income individual. homeownership, charitable giving and retirement savings will be protected but other tax benefits will be eliminated. this isn't going to be easy doing big things never is. we will be attacked from the
campaign, we will lower the business rate to 15%, we will make it a territorial system. we will have a one-time tax on overseas profit which is will bring back trillions of dollars that are offshore to be invested here in the united states to purchase capital and to create jobs. the president is determined to unleash economic growth for businesses. this is not just about large corporations. small and medium-size businesses will be eligible for the business rate as well. as guerinry said, we have had very productive meets with the house and senate working weekly to get this done. we will continue to do that, we are determined to move this as fast as we can and get this done this year. i would also comment we will hold listening sessions.
one thing this president has done very well is listen. we've had hundreds of business leaders here from all different types of areas, manufacturers, retail, airlines, community banks, big banks, we are listening and we have been taking feedback. finally i would just add the president's objective is creating economic growth and as we've said before we believe we can get back to 3% or higher gdp that is sustainable in this country. the overall economic plan consists of massive tax cuts and tax reform, regulatory relief and renegotiating trade deals and with that we will unlock the economic growth that has been held back for too long in this country. with that we'd be happy to take a few questions. in the back. >> reporter: thank you, mr. secretary, when you talk about the individual tax rates you're
also talking about eliminating some of those tax breaks, are you talking about eliminating tax deductions? which ones are you talking about eliminating and which ones are you talking about keeping? >> we are going to eliminate on the personal side all tax deductions other than mortgage interest and charitable deductions. we think that will be sweeping reform. >> reporter: when you talk about lowering the dividend and capital gains taxes, how does that mesh with what you said this americaning about protecting the middle-class from the very, very wealthy who might be able to take advantage of -- i don't know if the word was loon hope but that would give them a lower tax break. >> what we've said is that the business rate is going to be available for small and medium-size businesses as well as corporations however we will make sure there are rules in place so that wealthy people can't create pass throughs and use that as a mechanism to avoid paying the tax rate that they should be on the personal side.
and i would just say on the dividend rates, we believe that restoring the 21st capital gains rate is critical to investment in this country. 20%. >> reporter: just another question about your pass throughs. the initial plan that the president as a candidate outlined also included freelance or contract workers in that 15%. wondering if that's the same. what's your rate on repatriation of funds overseas and what about the marriage penalty? >> again, first i would comment on the rate of repatriation. we're working with the house and senate on that but it will be a very competitive rate that will bring back trillions of dollars. as it relates to the definition of contractors and those lines, those will be the details we will be working with congress on as we turn this into a bill that gets signed by the president. >> as secretary mnuchin said, we are working were diligently with the house and senate on coming
up with final details of the bill. you're going into micro details. >> reporter: but very important ones. >> we agree, very important. our basic premise here is to simplifyimportant. our basic premise here is to simplify the tax system, lower rates and make it easy. we don't want to penalize the system. we want to make that very clear. we would work on that just as secretary mnuchin said. we will get back to you on that. >> so 10, 25 and 35% rates. do you have income brackets established? >> and, again, we're in constant dialogue with the house and senate, as secretary said, we're holding a bunch of listening groups right now. we have outlined. we have a broadbrush view of where they're going to be. we're running an enormous amount of data on the proposals right now. we will be back with very firm
details. we're very confident to where they're going to be. we just wanted to get out and give you a broadbrush overview of where we are. the president very much believes in taking on what the oversecretary instead to we've got officer months a lot more. >> with income taxes to be -- >> yes. yes. >> mr. secretary, thank you. mr. cohn, either one of you when you talk about the income, is this your first attempt, i guess, with this to start pulling back on obamacare? and also, what do you say to your fellow republicans who say that this tax reform package is more about corporations versus cutting debt? >> look, mr. tax reform package is about growing the economy, creating jobs. it's about the economy. as we started, president trump
comes in every day and talks to a few of us about economic growth, economic prosperity and jobs. and what are we doing to stimulate economic growth? that's how we're looking at this plan. you're 3.8% tax on capital gains, dividends and interest, the president looks at that very seriously as being a tax on capital, being spent to stimulate economic growth. people putting investment capital to work and people being taxed on their personal businesses. so we're trying to be rid of that to be more stimulative of that to create more jobs. >> is it more business or passing obamacare? >> it's business, it's to stimulate business investment. we're trying to stimulate business investment. >> on this, first of all does it pay for itself, on this plan, governing neutral? and secondly, what in here is non-negotiable. this goes over to congress with the 20% tax rate, will the
president refuse to sign the tax?
>> let me just say, again, the core principles of this, we've been meeting with the house and senate, and they agree 100%. the core businesses make business rates competitive, bring back trillions of dollars to create jobs. simplify personal taxes, create a middle income tax cuts. so those core principles are non-negotiable. and that's something that we all feel strongly about. as it relates will it pay for itself, again, like we said, we're working with lots of details on this. we have over 100 people in the treasury working on tax and scoring lots of different scenarios. this will pay for itself with growth and with reduced reduction of different deductions and closing loopholes. >> mr. secretary -- >> if it turns out that they
actually won't -- is the president comfortable with that, will he sign something? >> well, let me just say again, when we look at the deficit and the deficit has gone from $10 trillion to $20 trillion in the last administration, that is a problem. and the president is concerned about that. this plan is going to lower the debt to gdp. the economic plan under trump will grow the economy and will create massive amounts of revenues, trillions of dollars in additional revenues. let's go in the back. >> it the bill will replace some of the revenue and border adjustment tax, how will you make up for the adjustment in the corporate tax rate? >> well, again, today, we're putting out the core principles which include rates because we think that's a very important part of the plan. we will be working very closely, as i said with the house and the senate to turn this into a bill
that can be passed and the president can sign. and there's lots and lots of details that will go into how that will pay for itself. yes. >> the territorial tax system, is that a border adjustment tax? what is it? >> a territorial tax system means that u.s. companies will pay income on income related to the u.s. so it's territorial. u.s. companies will not be subject to worldwide income which has made them uncompetitive. >> are you concerned that perhaps the republicans might not go along with this, just like they didn't go along with the obamacare? >> again, i think that there's a lot of desire from everybody to pass tax reform. as gary said, we're at an historic moment. and republicans and democrats want to create jobs and want to help the american people. and as i said, the core principles of this, we have
agreement on, and we will work forward on the details. let's go in the back. >> thank you, mr. secretary. quick question, you bring up repeal of the debt tax, the state tax. this is an issue that's been going on for decades. and it used to be they were always talking about phasing out the death tax over a period of years. groups such as jim martin 60, the seniors association said they wouldn't accept and they want an immediate killing of the death tax. is that what this is going to be or a phaseout measure again? >> right now our initial proposal is to phase out the debt nax tax in a year. with implementation of the new tax, the debt tax will
disappear. >> two questions, this is obviously a statement of core principles. it's just one page. obviously tax reform will be much more complicated. when will we see the details? when will we see the actual plans? >> we're moving as quickly as we can. we're working with the
house and senate on the details. everybody is in agreement, we're going to move as fast as we can. and when we have an agreement, we will release the details. >> second question is, will the president release his tax returns so that -- >> the president has no intention. the president has released plenty of information and i think has given more financial disclosure than anybody else -- i think the american population has plenty of information on this. >> right there. excuse me. other people have a right to ask questions. >> my question is to either you, mr. secretary, or mr. cohn, you
mentioned middle class. middle class families watching this tonight on the news, a family of hour, median income, $60,000. what does it mean for them? >> going to mean a tax cut. >> how much? >> going to mean a tax cut. you're asking the same question that got asked over here. we will let you know the specific details at the appropriate moment. we're in very robust discussions with the senate and house leadership. they are progressing very quickly. and we will continue to give you more details as we have them. >> we'll take two more. right back here in the fourth year ago. >> a year ago, then candidate trump was asked if he believes raising taxes on the wealthy. i do i do, including myself, i do. the question is why isn't he doing that? and will the president end up paying more or less taxes as a result of this plan? >> let me just comment, i can't comment on the president's tax
situation since i don't have access to that. okay? but i would comment that our objective, okay, is the reduction in taxes will be offset by significant reduction of deductions in other items. so the effective tax rate is what we're focused on. let's take one more question right here. >> we have not seen the president's fashion returns but according to our estimation in the latest 2005 returns out there getting rid of the tax statement 5.3 -- would he only have paid 5.3 million in federal income taxes. your critics would say a lot of what you've presented would save the president's own businesses? >> let me just comment, what this is about is creating jobs and creating economic growth. that's what massive tax cuts and massive tax reform in simplifying the system is what we're going to do. the amt is just another example
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